Local small and medium-sized enterprises (SMEs) will have greater access to financing starting today.

The SME Working Capital Loan run by Spring Singapore aims to address these businesses' cash-flow concerns and growth-financing needs through unsecured working capital loans to be offered by 12 participating financial institutions.

Spring said in a statement that SMEs can apply for unsecured term loans of up to $300,000 each.

The trade support agency added that it will co-share 50 per cent of loan-default risks with the financial institutions under the scheme, which is expected to result in more than $2 billion of loans for SMEs over the next three years.

The SME Working Capital Loan was introduced in this year's Budget as one of the measures aimed at addressing near-term concerns while encouraging business growth and restructuring activities.

It provides an additional financing channel to support viable SMEs with larger working capital needs. "These companies may have cash-flow concerns or wish to continue growing their business in the slowing economy," noted Spring.

IMMEDIATE HELP

The SME Working Capital Loan offers a welcome relief for some of these SMEs, enabling them to address their immediate financial concerns as they look for growth opportunities.

SBF CHIEF EXECUTIVE HO MENG KIT

A recent Singapore Business Federation (SBF) study found that more local enterprises are facing financing issues, such as the rising cost of bank loans and difficulties in renewing financing. But close to three in five companies also have plans to increase their investment for business expansion this year.

"SMEs, by virtue of their scale, often face obstacles obtaining credit from banks and financial institutions," said SBF chief executive Ho Meng Kit.

"The SME Working Capital Loan offers a welcome relief for some of these SMEs, enabling them to address their immediate financial concerns as they look for growth opportunities."

To be eligible for the loan programme, SMEs must be registered and operating in Singapore, have a minimum of 30 per cent local shareholding, and a group annual sales turnover of not more than $100 million or a group employment size of not more than 200 employees.

OCBC Bank, one of the participating financial institutions, said SMEs can apply for the loan at its two newly-launched Business Loans Centres - in Ubi and Bukit Batok - which specialise in handling government-backed loans.

Mr Eric Ong, OCBC's head of emerging business, said: "The idea is to bring the bank to the SME owners - by making it easier and simpler for them to find out what are the financing options that work best for their business needs, so that they can apply for the loans immediately and get the necessary funding."

Interested SMEs can visit www.spring.gov.sg/loan to find out more about the programme, and approach the respective participating financial institutions to apply for such loans.

A version of this article appeared in the print edition of The Straits Times on June 01, 2016, with the headline 'Another funding scheme for local firms launched'. Print Edition | Subscribe

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